Islamabad April 18(Online): The federal government has approved the draft Centralized (Know Your Customer) Organization Rules, 2016, framed under the Securities Act, 2015, to obtain public comments by May 15. The draft rules have been notified in the official gazette of Pakistan and also made available on its website.
Currently all capital market intermediaries such as securities brokers perform registration/account opening process for their clients separately.
This process involves collection of supporting documents from the clients which not only leads to duplication of efforts and waste of resources but also results in clients having to repeatedly undergo Know Your Customer (KYC) process each time they open an account with an intermediary.
This can at times lead to variation in the KYC information for the same client such as mobile number, email, address, etc. available with different intermediaries. Moreover, the possibility of individual intermediaries not being able to verify the accuracy of KYC information creates problems of authenticating whether the client is operating his or her own account.
The verification of KYC information is particularly pertinent as an efficient KYC system serves as the backbone of an effective anti-money laundering (AML) and counter-terrorism financing (CTF) regime.
Thus it has been envisaged that a Centralized KYC Organization (CKO) shall be established. It will develop a centralized system for maintaining separate and exclusive database for the KYC information of clients maintaining accounts with market intermediaries. The duplication of procedures performed at the time of opening accounts with different market intermediaries will also be avoided.
The draft rules therefore provide for the licensing and operation of a CKO in Pakistan.